Euro, U.S. Treasury yields fall on Greek default worry

Fri Jun 19, 2015 4:43pm EDT
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By Herbert Lash

NEW YORK (Reuters) - Worries that Greece is edging toward default on its debt drove investors into safe-haven assets on Friday, pushing the dollar and U.S. Treasury prices up and causing a gauge of global equity markets to retreat.

Trading in European markets remained calm as investors hoped an emergency meeting of euro zone leaders next week will keep Greece from defaulting at the end of the month on 1.6 billion euros in debt owed to the International Monetary Fund.

The subdued reaction to the Greek crisis in recent weeks supports the notion that the exposure of Europe's private sector to Greece is minimal, and that a default or a Greek exit from the euro zone would have little impact on the other economies.

Greek shares .ATG, down 17 percent so far this year, rose 0.57 percent even though talks collapsed late on Thursday.

The euro dipped 0.11 percent against the dollar, within recent ranges. Major European stock markets gained, with the exception of Germany.

But the dollar and Treasury prices rose, a sign some investors were seeking safety in those assets. Greeks pulled more than 1 billion euros out of their banks in a single day, banking sources said on Friday.

"Right now, what the market has priced in is a reasonably positive outcome, one that would delay any default," said Millan Mulraine, deputy head of U.S. strategy at TD Securities in New York. "But the markets are still nervous and that's what we're seeing in Treasuries."

Benchmark 10-year Treasury notes US10YT=RR were last up 24/32 in price to yield 2.2630 percent.   Continued...

Traders are pictured at their desks in front of the DAX board at the Frankfurt stock exchange June 19, 2015.     REUTERS/Remote/Staff